tv [untitled] January 30, 2013 11:00pm-11:30pm PST
nine-pages full of numbers. i think we all can digest things pretty quickly, but it was e-mailed to us this morning. and so for us to honestly have a chance to look at this and digest it and kind of come to a thought process about how we think about these things, i think we need it well in advance of the morning of an 11 o'clock meeting. just a comment to that. it's really unacceptable from our point of view. >> i apologize for that. so, we have two agreements of fast past agreement in which we pay bart for people using the adult fast pass within san francisco. we pay on the per-trip basis. and the feeder agreement, bart pays us based on our provision of services to and from their stations. historically the fast pass agreement has been based on the fixed discount rate off the regular bart ticket. so, for example, the last
agreement gave about a 32% discount, the reimbursement rate was probably 32% less than the price of the full fare ticket. and per the bart board fare policy which has been in place over 10 years at this point, the bart board regularly increases fares every two years at a rate consistent with cpi less half a percent for productivity improvements. with this fare policy in place over the last decade, there has been -- there have been occasions when the fare has actually increased faster than the rate of inflation. for example, as identified by the budget and legislative analyst in 2011, fares from 2006 to 2011 increased at a cumulative 40% rate or 7% annualized rate. the contract for the fast pass is currently at current reimbursement rate is worth
$7.9 million. and for the proposed rate increase, it would be $9.2 million. >> so, quick question for you. why are we allowing this rate to increase like this? >> well, so, so this dollar.19 was based on having that fixed discount of 32%. the bart fare went from $1.50 to $1.75. based on this particular agreement, we would go up consistent with that. and from there on out it would be based on cpi. >> so, i understand that comment. to me it's part of the core issue of what's going on here. but we're basing it upon bart fare increases which is out of our control. and to me, but it's coming out of our budgets now. so, we're kind of linking and falling victim to whatever bart decides to do. and that strikes me as a raw deal. , i'm trying to get an understanding. historically how it's been done that's one thing. but we're here to decide how it
is going forward. we're trying to understand why and the justification for this. 32% as a historical formula that's well and good but i'd like to understand why today. >> i think it was the sfmta [speaker not understood]. i think it was the sfmta's understanding that we would do this one time and then go forward from here it would be based on cpi. so, this agreement would take us to 2014 based on that formula. but i understand, i understand what you're saying. * there. for the feeder agreement, historically it's been based on a different methodology. when it was originally conceived in the mid 1980s, it was based upon the actual number of feeder trips that would [speaker not understood] at that point, multiplied by the net cost per passenger. and that cost per passenger was basically the total amount cost minus the fare revenue that we got. the budget and legislative analysts in their report last year calculated that would be
approximately $15 million under that same methodology. in 1989, both parties agreed to -- at that point to transition over to a sales tax based methodology. and one of the issues there was that the sales tax methodology was easier to do because we could not count ridership. we didn't have any way of tracking that ridership electronically. and, so, so, over time that number has fluctuated based upon sales tax revenues and how the sales tax revenues have fluctuated. so, for example, in fiscal year 2009 to 2011, the payment under this current form would be increased by 18% because of the fact that the economy had affected sale tax received that weren't received. we recognize the $15 million versus the contract value of
approximately $2.6 million is quite a substantial difference. during negotiations we discussed this issue and we were very pragmatic about this. we did not feel that it would be feasible to transition to an amount like $15 million overnight. so, that's the feeder agreement. in term of -- those are the historical developments of both agreements. and now i'd like to walk you through the proposed amendments to the agreement.
so, for the past pass agreement, the term of this would be from retroactive from january 2010 through june 2014. and for the feeder agreement the term would be from july 2010 to june 2020. the difference here is ed explained that the bart board fare policy has expired with the last fare increase in july 2012. and, so, this fast p pass agreement would coincide with the renewal of the next fare policy. * >> just to your point, so, it's the feeder agreement going back to 2010? >> both the feeder agreement and the fast pass agreement go back to 2010. the fast pass agreement would expire in june of 2014 and the feeder agreement would expire in june of 2020. so, there is a difference there based upon the bart [speaker
not understood] fare policy and that being renewed anticipated this year some time. >> right. so, the fast pass agreement, what are we paying them right now? >> currently for fiscal year 2012, the contract value under the current rate of $1.02 is $7.9 million and under the proposed rate it would be $9.2 million. >> and prior years in terms of reserving, i'm imagining reserve again in your budgets, it was at 102? >> it was at $1.2, correct. >> and, so, we have before us a proposal to retroactively increase it? * >> retroactively going back to january 2010, correct. so, the june -- in july -- at 2009 bart implemented their fare increase. the last fast pass agreement expired at the end of 2009. so, it would be -- this
retroactivity would take place six months after the fare increase that this would compare to. >> thanks. i don't get why we do this, but let's keep going. >> okay. >> mr. lee, can i say mr. rifkin pointed out that 2020 for the feeder agreement, the contract expense of that, this one would extend only to 2014 because we're trying to maximize our ability to negotiate after the bart board's fare policy increase. and this allows us to negotiate to our own interests for the mta and the city by having this contract only go to 2014? >> well, i think the idea behind going to 2014 was we wanted to wait and see what the bart board fare policy would be. my understanding from bart's staff, conversation, is they are proposing a fare policy that's similar to what or consistent with what's currently there today. so, that was the idea behind
having it expire in 2014. >> so, what would happen if we equalized both contracts to 2014 or 2020, what's in our best interest as the mta or the city? >> certainly that's possible to equalize the contracts there. i'm not going to opine on whether -- what's best for the city or not. i think maybe that's a more appropriate question for mr. rifkin on that. but certainly it's useful. >> well, right now doing it to 2014 so we can have better future negotiating leverage? >> i think the idea behind 2014 is just so we understand what parts fare policy is. staff has proposed a similar fare policy as in place today. but nothing has been adopted at this point so we don't know with certainty what that fare policy would be. >> okay. >> okay. so, --
>> excuse me, supervisor avalos. >> thank you, chair farrell. we had the fast pass agreement before us, before budget and finance earlier. i'm not sure exactly when it was, last year -- >> 2011, yeah. >> 2011. and at that point there was a proposal for passenger rate. what was the actual rate? $1.02 before. what was being proposed back in 2011? i'm trying to figure out if there -- since that time, i don't think we're quite satisfied with what the rate was and it changed during the ensuing negotiations that happened. >> okay. so, thank you for that question. so, there are some changes between -- in terms of the term of the previous agreement that you considered and today. in terms of the actual rate there was no change in the rate. so, at that point it was also proposed to go from $1.02 to $1.19.
there were some changes in terms of the length of the agreement as well as the cap issue. i can go through those if you like as well. >> if you could briefly, i would appreciate that. >> sure. so, before the fast pass agreement was going to go from -- retroactive back to january 2010 to june of 2018. and then the cap would be structured based on the reimbursement rate itself of 10%, but not on the total amount. so, for example, if the fares were to increase 10% in rider ship growth were to be 5%, then the total amount increase would be 15.5%. and then the future reimbursement rates would be tied to the percentage of growth in bart fareses similar to the way it's been historically structured. * those were the terms of the past agreement. >> thank you. and then the mta has already budgeted to provide a
retroactive payment for these agreements? >> yes. >> the agreement? >> that is my understanding that is correct, yes. >> thank you. >> thank you, supervisor avalos. we have been joined by our colleagues, supervisor campos. supervisor campos. >> thank you very much, mr. chairman. i was watching the hearing and appreciate the work that was done by the mta, by bart, and i also appreciate some of the questions -- actually, all of the questions that were asked by my colleagues. and i know that this has been something that we have been working on for quite sometime. and you know, as i said when we first had this item come before the board, you know, we want something that is fair and reasonable for both agencies. and i appreciate the fact that, that both agencies have been working, you know, to get to that point. i'm not really sure, to be honest, if we're necessarily there and that's not, you know,
because of a lack of trying. but i wanted to just point out a couple of things that to me are sort of interesting and certainly raise some concerns. i do have a question about why, you know, when we -- when we sent these items back, there was an idea that if we have an agreement where we're paying bart and we have an agreement where bart is paying us, that there be some similarity, or at least, in terms of what each agreement looks like. in this case you have two agreements. one has a term ending 2014, another one has a term ending 2020. you know. i don't understand why that is. if you look at some of the amounts that are being paid, the cap in terms of what the city is responsible for paying
bart is $14 million, as i understand it. which is about 52% more over the next two years. and then if you look at what -- where bart is paying the city, that is capped at 5%. so, i'm not saying that it should be 5%, but there was a big disparity between 52% and 5%. i think the budget and legislative analyst had a recommendation in terms of the fast pass agreement of 10.5 million which would have made it 14%. and, so, again, i'm not saying that it should be this number or that number. but in terms of parity between the two agreementses and the approach, i do think that there are some questions that jump out, you know.
and, so, just wondering if you can comment on that. >> yeah, i would be pleased through the chair. to a number of comments all very good and fair comments and questions. first i want to get to the letter i sent you late last night, which i know was just a few business hours before the meeting today. i take full responsibility for the delay on that. it was some kind of back and forth between us and bart and making sure we were getting what's kind of a complex issue boiled down to clear, understandable terms. so, i apologize for that. we had anticipated getting this before the previous budget and finance committee. we went through a round of briefing all of them and the board composition changed. we endeavored to get the new committee members briefed. so, we accept -- i accept responsibility for that. in terms -- both supervisor mar, supervisor campos brought
up the issue of one is 2014, one is 2020. so, again, a couple things. one is that we requested from bart that they agree to a shorter term for the one agreement pending the kind of resolution of their fare policy which we expect to be coming within the next couple of months. if that comes into place as bart staff will be recommending to bart board, we would want to negotiate an extension out to 2020. so, we would get them on par that way. in terms of the question, would it be better to have both of them short term, both of them long term, as i said before for purposes of the staff time that's involved and the process even in securing approval for these agreements, and also for budget certainty for the next few budget cycles, it would be my strong preference that we have longer term agreements that have a framework that can account for changes and conditions that keeps things i think on a fair footing.
in terms of the idea that things bump up when bart increases the fare, arguably what the fast pass does, if you buy that fast pass, you're paying us to be able to ride on bart system. bart's fare increases ostensibly represent the cost of bart providing the service. so, as bart's costs go up, i don't think it's unreasonable that that cost may go up. it's true, we don't control bart's fare increase, but i think it's also fair to say that bart's not making its fare policy decisions based on, you know, what it's going to get out of this agreement. i know you weren't suggesting this, butedth fact that we don't control it i guess my point is i don't think is inherently a bad thing. and then finally, the final point on the cap, i said before supervisor campos arrived, we in bart are willing to accept
the budget analyst recommendation to bring that cap down to be closer aligned for the two years that the agreement is in place. if we extend it, we would come back with perhaps an adjusted cap. >> so, mr. rifkin, supervisor campos, sorry, do you have any follow-up? >> no, go ahead. >> so, a few comments on that. one, in terms of our payment to bart is based upon their fare increases. their pitv to us is based on a cpi growth. * payment that to me seems bizarre. i understand they're paying for their service, but they could do -- i'm not saying they do, but they could do a lousy job of curtailing costs or working to drive efficiencies in our own organization and we bear the brunt of that now. we do the same, we could work hard, but they don't -- it's not reciprocal on both ends and we have our own constituencies to deal with. whether it be political or working with your own staff. and to have ours -- their payment to us based upon cpi growth and ours based on
whatever they decide to charge their riders, i'm not to say it's whimsical, not making light of that, but it seems unbalanced at best. >> and that's one of the reasons why we didn't want to extend beyond until we saw that they had a fare policy in place that was maybe kind of like ours. that is just an inflation adjusted fare to give ourselves some of that protection. it's just they are different agreements. you know, one of them you're taking a muni ound fare product and riding on bart. fact you've taken muni to get onto bart using a muni fare product. * they're not exactly aligned in terms of the agreement because what the agreements -- the underlying kind of mechanisms that we're trying to bring to the two systems and trying to improve integration of the transit system, they're just different things that the agreements are for which is maybe why there's two different agreements in the first place.
>> understand. to the points about the terms of the contract, i guess long term contracts are better for saving staff time, i fully understand that. the other part that i'm still uncomfortable with, and i just don't understand why we wouldn't be bargaining for this. we have a -- they have negotiated to us a maximum of 5% cap annually. depending upon how our federal debt situation, cpi could erupt past that. right now we're not hitting that at all. and we have no cap on their increases. so, how do we think about that? >> there is a cap -- there is a dollar amount cap right now, but there is also a percentage cap in terms of what they can -- they pay us. that seems to be a lot -- a lot of lower threshold here that we don't have. >> then again, we in bart are willing to accept that lower cap. maybe bart can speak better to why from their standpoint the dollar cap makes more sense.
their thing is it can be much more variable in terms of the one agreement, things they see they don't control. but bringing it down to 10-1/2 million as the budget analyst recommend i think would bring it closer in parity to the other agreement. >> okay, thanks. supervisor campos. >> thank you very much, mr. chairman. and i think that i share your concerns in term of the parity. and i appreciate that you're willing to go to 10.5 and 14% over the next two years. you know, i don't know that it should be 5%, but they're basically capping it at 5% and, you know, why shouldn't ours be at that level. i'm not saying that it should, but it's just a question that's there. but let me ask you a question. to the extent that we're tying
the feeder agreement -- that we're focusing on the fareses at bart. where is bart in terms of its fare discussions right now? >> my understanding is that they will be bringing to their board i think maybe in march or so a proposed fare policy. maybe i'll let bart directly answer the question. >> and if that's the case, the question that i have is, you know, why not wait until we actually have a better understanding of what the fares are going to look like at bart? that's sort of a question that i -- >> well, i guess the answer to that is we could wait. we don't have any kind of real hard deadline here. as i said at the beginning, we started working on this a year and a half ago when grace and i first came into office. we're withholding payments from each other pending resolution of this. it's something that we've spent now a lot of time getting to this point. it took awhile getting through
this process get tog this meeting. we're eager to get this done so we can close this and move forward. that's the reason. it's not a hard deadline. we're already long past that. and then i can let bart speak to the timing. >> please. thank you. >> good afternoon, my name is pamela [speaker not understood] and i'm here to speak on behalf of bart. so, first, to answer one of the most recent questions, we anticipate taking to our board sometime in this calendar year a renewal of our inflation based fare increase program. and this program raises fares every two years at the rate of national and local inflation less one half percentage point. so, there is some well crafted -- i can't speak to the board for our board as to whether they would approve that, but that is what we plan to take forward to the board. in the fast pass agreement there is a well crafted clause that when we get to the summer
of 2014, two years into a year and a half from now, and we have not reached agreement going forward on a reimbursement rate, the reimbursement rate will continue at this inflation-based fare increase level. this is inflation less a one half percentage point. so, that is, that is what sfmta would look at going forward should we not reach some other type of reimbursement rate. so, and again, we anticipate taking a renewal of the fare increase program to our board, but as of yet we haven't taken it and they haven't acted on it. >> thank you very much. i was wondering if i could ask mr. rifkin just a follow-up question. and, again, i really appreciate all the work that's gone into this. i think it's great that we are where we are. i just think that, you know, there's some questions that remain.
maybe you said this already and i apologize. but for the benefit of people who are here watching, where is the mta's payment with respect to the fast pass agreement? is that coming out of operating budget? >> these are all operating budget item. >> and how much more would -- or last, you know, would the mta be paying annually under the term of this agreement? >> i believe -- is it the fy '12? yeah. on the summary sheet, it's the information we provided, we'd be going on the fast pass from 7-8 to 9-1 for the last fiscal year. from about 2.6 to 2.7 on the
feeder agreement. >> so -- i guess i do have a question on it, this is fiscal 12. we should talk about the future, what we project on the 13-14. i think they got the better of us right now on the negotiating to be perfectly blunt. we have a retroactive contract value where they're getting an additional 15% off of what the old value was and an increase of looks like 1.3, 1.3, $1.4 million, and we're getting an additional $75,000 and an increase of about 2.9%. it seems to be very inequitable. this is retroactivity, right? this seems to me like a gift. this is an agreement to be good natured together. that's a lot of money. that's a big difference. >> well, we're retroactive buzz the agreement we broth forth a year and a half ago was rejected.
so, we didn't -- we're kind of further in arrears now. what we're -- what we're trying to do, the two agreements are different there. they represent different passenger activity. so, that's a little apples to oranges. that's why there are two different agreements. that's why the terms are different. we believe that this is fair and equitable what we assumed in our budget. so, this is an additional cost beyond what we've assumed. what we negotiated we believe is fair for muni and bart and to encourage and facilitate regional transit coordination. >> okay. >> if i may. i mean, i think i understand exactly what you're saying, mr. rifkin and i think your team has done a great job with this. i do -- the question for me,
right, is if i, if i were to vote on these two agreements and a muni rider asks me, you know, whether or not we are protecting them as much as we can in terms of what comes out of the system, what is paid by the mta and in turn what the mta has to pay bart, i'm not sure, to be completely honest, how i would answer that question. and i understand that there is a negotiation in good faith and that you have two parties that each has their own financial challenges and constraints and you have two agencies that are trying to work together. but i do worry that we're kind of getting the short end of the stick to an extent, you know.
if i can be honest, and that's the concern that i have. again, i appreciate the work that you have done and i understand and respect where you're coming from. >> i'd echo that as well. i respect the work [speaker not understood] put in on this. if we want to get to an agreement, although i fully concur with the sentiment here. question for you. what happens if we don't agree to this? what happens to payments for the terms of the existing contract? do we go month to month? where do we go? >> we would -- i believe we're both withholding payments from both right now. at some point we're going to have to reconcile because we're kind of screwing up each other's budgets and that's not in anybody's best interest. so, maybe we would make some sort of tentative agreement on to try to clear out retroactivity. although both sides are going to be hesitant to make any kind of agreements not knowing what the ultimate agreement is.